Garment and furniture exporters joined calls for the government to step in and address the deteriorating shipping and logistics situation in the country.
Robert Young, Philippine Exporters Confederation, Inc. (PHILEXPORT) trustee for the textile sector and president of the Foreign Buyers Association of the Philippines (FOBAP), said the garment industry is incurring millions of dollars in losses due to the supply chain squeeze.
Exporters are facing transport issues, including vessel capacity constraints and surging freight prices, which are leading to cargo delays and revenue setbacks.
“The issue of vessel space availability is a huge one for us and our clients. Delay is between two weeks to almost two months,” Young quoted one garment company. “We are seasonal holiday heavy and [it is] very critical that goods move on time as they have a short selling period.”
This situation is creating production space issues which are creating a domino effect, [such as] continuing delays in our shipment. “My concern is that even if vendors finish production of their orders, if they are not able to move [the goods], they don’t get paid, [creating a] cash flow issue”, said another.
This, along with other issues such as the slow release of permits and import license, rising cost of natural materials, and shortage of raw materials, adds to manufacturing costs and leads to continuing loss of business in favor of Vietnam and Indonesia, one exporter added.
Meanwhile, furniture exporters have asked the Chamber of Furniture Industries of the Philippines to help them find slots on vessels and address soaring freight rates.
Cost of freight has gone up from around $4,000 per 40-foot container to $12,000, revealed one shipper, adding this makes their products uncompetitive.
“We hope that we can resolve this soon as the worst is yet to come”, the exporter said, referring to the approaching peak shipping season. The third quarter and fourth quarter surge of exports might be a nightmare with this current setup.
PHILEXPORT president Sergio Ortiz-Luis, Jr. earlier said that while this is a global issue that may be beyond anyone’s control, the government and private sector must still work closely together to effectively address the logistics constraints.